Context: Last month, ip fray exclusively reported on a decision by the European Court of Justice (ECJ), which is the highest level of the EU judiciary, to (re-)hear a preliminary reference case originating from a Swedish patent enforcement action involving patent rights in ten countries, among them a couple that are not EU member states. This article is only a brief follow-up to yesterday’s ECJ hearing, so for a more detailed explanation, you are kindly referred to the April 12, 2024 ip fray article on the referral of the matter to the Grand Chamber (the first-ever referral of its kind in a patent case).
What’s new: The ECJ, which is based in Luxembourg, held the hearing yesterday (May 14, 2024). At this stage it is not possible to predict the outcome as most of the 15 judges did not ask a single question. It appears that the judge-rapporteur, Judge Spineanu-Matei, is at least somewhat receptive to the patent holder’s arguments, but the most significant news is that the European Commission (EC) and the French government (the only two governmental entities to participate actively in oral argument) favor cross-border patent enforcement even with respect to patents in non-EU member states, provided that the defendant is sued in its home venue (also called “forum rei” in Latin for “defendant’s forum”).
Direct impact: The EC’s input generally bears significant weight with the ECJ and the French influence in the EU is also fairly strong, so the patentee is in a stronger position now than before. There is now a real possibility (though far from certainty) that the court may acknowledge the difference between invalidating a foreign patent and simply assessing the likelihood of invalidation for the purposes of economically and efficiently resolving a cross-border damages action.
Wider ramifications: At the hearing, the question of whether a distinction should be made between the non-EU parts of European (in terms of granted by the European Patent Office (EPO)) patents and totally foreign patents (such as U.S. patents). The EPO is not an EU institution. It is run by the European Patent Organization (EPOrg), whose members include all EU member states but also more than a dozen others, such as the UK, Turkey and Switzerland. It would therefore be difficult (though not impossible) to pronounce a rule that applies to the ex-EU parts of EPO-granted patents. Otherwise there is a possibility that patent holders could, for example, seek damages or even injunctions over U.S. patents in an EU court, provided that they sue where the defendant is based.
The defendant, Electrolux, primarily argues on the basis of international comity (courts should not engage in overreach usurping each other’s jurisdiction) and with the public interest in formally removing invalidated patents from a patent register, which is only possible if a national court of competent jurisdiction makes the decision. But the latter argument is weak as a patent that a foreign court has already considered invalid is already significantly weakened. While it can formally still be enforced, and it can and should be enforceable particularly in case one can convince a court that its foreign counterpart made a mistake, a patent that a domestic court would also hold invalid will be hard to defend when there is persuasive foreign authority.
In this particular, Electrolux is clearly just a hold-out. They appear to have no credible invalidity theory anywhere after they lost the most important decisions in that regard (though they were temporarily on the winning track in Germany). What they want is to make it economically unviable to seek damages in all those countries. But, of course, the ECJ is mindful of the fact that there could be other cases where a defendant has a more legitimate interest in not being sued in one country over patents in numerous other countries.
Interestingly, the question of whether the Unified Patent Court (UPC) doesn’t already provide enough of a cross-border enforcement opportunity within the EU didn’t come up. What got the ECJ’s Grand Chamber involved here is most likely the comity part of the equation: the impact on the relationship with other jurisdictions.
Electrolux mentioned a U.S. Supreme Court case involving a trademark in the EU where the EC successfully argued that U.S. courts should not apply U.S. law to EU trademarks. But that is precisely not what BSH Hausgeräte GmbH wants in this patent case now: they and those backing them (EC, France) absolutely understand that, say, a Swedish court would have to consider the Turkish legal framework when taking a position on whether a Turkish patent is likely valid.
The question came up whether there could be a problem with outcome-determinative procedural rules. A patent may be valid from a substantive point of view (there is no prior art that invalidates it), but something could have happened procedurally that would result in invalidation under the foreign jurisdiction’s laws. Here, again, the counterargument is that such arguments would then have to be raised in the defendant’s home court.
If one thinks this through in practical terms, there could be some rather interesting implications and tactical options for patentees. For instance, even though a defendant could argue that the eBay standard for U.S. patent injunctions should apply if a U.S. patent is enforced in an EU court, it is hard to imagine that a German national court (given that it’s a very “injunction-happy” jurisdiction) would be equally unlikely to enjoin the infringer as a U.S. court would be. Also, it’s obviously not going to be possible to put a U.S. patent before a jury in a German court. Conversely, if U.S. courts at some point started to do the same and enforce EU patents, and if the U.S. then also said they would apply the laws of the country in which the patent is registered, damages awards could still be way larger than if the same patent was enforced in the EU.
Advocate General Nicholas Emiliou will write an updated opinion based on yesterday’s hearing and the additional briefing related to it. His target date for the new opinion (he already authored one between the hearing before a regular chamber and the referral to the Grand Chamber) is July 11, 2024.
With a view to counsel, the mastermind of this cross-border litigation strategy and the preliminary reference to the ECJ is German attorney-at-law Dr. Roman Sedlmaier of IPCGS, who has considerable experience in multi-jurisdictional patent litigation and licensing negotiations. While Swedish lawyers made the opening statement, Dr. Sedlmaier answered some of the questions, and in one case he explained the matter from the perspective of those negotiating license agreements: guidance from courts (he didn’t use that term, but it’s a way of summing it up) is helpful even if a court takes a position on a foreign patent, as the negotiating parties will take that into consideration with a view to the commercial value of a license agreement.
Dr. Sedlmaier is also the lawyer who negotiated the settlement between Deutsche Telekom and patent licensing firm IPCom over which the licensee brought an antitrust action in Mannheim years later, and he particularly authored the paragraph under which Deutsche Telekom explicitly left it to IPCom whether they would want to enforce their patents against other telecommunications carriers. Based on that provision (though there wouldn’t be an antitrust claim anyway), the Mannheim Regional Court and the Karlsruhe Higher Regional Court sided with IPCom, and Deutsche Telekom is now trying to get the Federal Court of Justice interested.
For all other information on counsel, and on this case in general, please check out the previously mentioned April 12, 2024 ip fray article.